On April 3, 2025, Shoppers walks the King of the Prussian Mall as global markets become obsessed with trade and growth as President Donald Trump’s decision to impose import duties on dozens of countries in Prussia, Pennsylvania.
Rachel Wysnievsky | Reuters
At the beginning of 2025, America is the story of two consumers.
According to first quarter results from US credit card lenders, low-income people are curbing their transactions to focus on essentials, while wealthy people continue to spend their free time on perks such as meals and luxury travel.
With unrest from President Donald Trump’s opening trade policy Salvos spread across the country in recent months, investors and economists are wondering whether a decline in consumer sentiment will ripple into the real economy. There are some early signs of stress among already economically vulnerable people.
For example, Synchrony, which offers store cards to retail brands including Lowe’s and TJ Maxx, saw spending fall by 4% in the first three months of the year, the company said last week.
This is comparable to the 6% spending jump on American Express and the similar rise at JPMorgan Chase. Amex said customers spent 11% more on meals, up 7% and 11% more on meals than a year ago.
“Consumers are still in pretty good condition,” Overall, they are “selective about how they use it,” cycling CEO Brian Doubles told analysts on April 22.
Low-income card users in particular “we started spending repeatedly about a year ago,” and inflation led to a discretionary, large ticket costs back towards purchasing power, Doubles said.
Being late
Many Americans were already in debt while using their credit cards in the fourth quarter. Federal Reserve data released this month from the Federal Reserve Bank found that only minimum monthly payments reached 11.1%, rising to the highest level in 12 years.
But so far, credit card lenders serving wealthy clients have been insulated from concerns later this year about how tariffs, inflation and potential recession will affect consumer spending.
“It’s safe to say that the high end is getting better and the low end is pulling back,” said Brian Forlan, a trumped store analyst who covers the banks, in an email. “This was a common theme I’ve heard from most of my colleagues who cover the consumer and retail side of talking to credit card companies.”
The split was also seen in Citigroup, a leading player in the credit industry. Expenditures in the sector that offers cards to retailers fell 5% in the quarter, but plastics carrying bank brands (cohorts of higher credit scores) increased 3%.
Citigroup and Bread Financial, another provider of other stores and co-branded cards like Synchrony, said consumer behavior has left travel and entertainment away from travel and entertainment with concerns that tariffs would raise the prices of some products.
Dynamics are now boosting spending, but it could mean weak future demand.
“Consumers are buying more electronics, furniture and auto parts,” Pan CFO Perry Boeberman said last week.
People are trying to grasp it, are they still going to buy that big TV, or if inflation reaches at some of the rates they can, they’re going to make a few other choices,” Beberman said. “That’s the real wild card here.”
